Class action looms over solar tariffs

The NSW government faces a threatened class action by 1000 dis­gruntled solar-panel installers and householders over its plans to slash solar feed-in tariffs.

NSW Premier
Barry O’Farrell
is facing heavy opposition from industry groups, voters, the Greens and members of his own party over his plan to fix a $759 million blow-out in the solar bonus scheme.

Mr O’Farrell retrospectively slashed solar feed-in tariffs paid to households from 60¢ per kilowatt hour to 40¢, which the NSW government calculates would save $471 million. The scheme was already frozen in late April, given the government’s ­concerns over costs.

Sydney law firm Neville and Hourn partner Matthew Hourn said yesterday he was preparing a class action on behalf of up to 1000 complainants, which would be launched if the government went ahead with reducing the tariff.

The complainants include installers who invested heavily in their business expecting the scheme to continue, and retirees who were induced into the scheme on the basis of the 60¢ tariff, but who would now find it ­difficult to repay the installation costs.

The government said yesterday it was still considering alternatives.

“We’re happy to continue to have discussions with whoever, providing, at the end of the day, it ensures that the blowout in the cost has been met," Mr O’Farrell said. “There is no half answer here . . . it has to be paid for."

But one proposal put forward by solar industry groups has been rejected as inaccurate by energy retailers.

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The Australian Solar Energy ­Society and the Solar Energies Industry Association met with the government on Friday and outlined a plan it said could almost cover the shortfall without the need to cut the tariff paid to solar-generating households.

Society chief executive John Grimes said the government could save $455 million without cutting the tariff.

“Currently all that solar energy that is generated is fed into the electricity grid, and the power retailers are paying nothing for it, so it is a huge windfall profit for the power retailers that goes straight onto their bottom line," he said.

Mr Grimes said the energy retailers then charged consumers using that electricity 20¢ per kWh. He said the ­government could recoup up to $416 million if it charged the companies, including TRUenergy and Origin.

But Energy Retailers Association of Australia head Cameron O’Reilly said only a small part of the retail cost of energy came from generating the energy itself.

“More than half of the retail price is due to network costs, government charges and retailer infrastructure costs and these still have to be paid regardless of whether electricity comes from coal-fired power stations or rooftop solar," he said.

“There were also substantial administrative costs for retailers in managing the raft of different feed-in tariff schemes across the country – costs which are never recognised or recovered."

Mr O’Reilly noted many electricity providers paid households a premium on top of the government’s 60¢ tariff. Origin pays its customers a premium of 6¢ for each kWh produced.

Ministers are expected to discuss the proposal in a joint party meeting today. Solar Industries Association president Ged McCarthy, who represents importers, installers and customers, said his members were shocked by the NSW government’s “immoral" action to ­retrospectively amend the legislation.

Greens member
John Kaye
said a household which invested in a 10 kilowatt system would lose $2920, or around $16,000 over the life of the scheme, which is due to expire in 2016.

“Many households that did the right thing and invested in the states’ solar future, will find it very hard to meet the repayments on their systems," he said. “They have good reason to want to involve themselves in a class action, and I fully endorse them."

The scheme started in January 2010 and paid the most generous tariff across all the states, with around 160,000 homes in NSW generating 365 megawatts of solar energy ­annually.